Back
23 Feb 2016
What China says and what China does... - BBH
Analysts at Brown Brothers Harriman explained that in his pre-G20 presentation, US Treasury Secretary Lew reiterated the US position.
Key Quotes:
"Contrary to the spin of some news wires, he did not announce a new policy. The US Treasury's semi-annual reports have not objected to the unorthodox monetary policies as an act of (currency) war.
Rather, the criticism has been what is seen as an over-reliance on monetary policy, without significant structural reforms or other attempts to bolster aggregate demand, especially from current account surplus countries. The US Treasury has also been critical of smaller countries, like South Korea and Taiwan for too frequent intervention and the lack of transparency. This criticism has also been levied against China.
The US concern is not over what China says. In fact, it seems as if the US can embrace much of what the PBOC says about the yuan. The issue is the gap between what China says and what China does. Simply because China is a one-party state, it does not mean the government is homogeneous. There are many different stakeholders and the reform-minded PBOC is one among many, and its arguments do not always seem to carry the day."
Key Quotes:
"Contrary to the spin of some news wires, he did not announce a new policy. The US Treasury's semi-annual reports have not objected to the unorthodox monetary policies as an act of (currency) war.
Rather, the criticism has been what is seen as an over-reliance on monetary policy, without significant structural reforms or other attempts to bolster aggregate demand, especially from current account surplus countries. The US Treasury has also been critical of smaller countries, like South Korea and Taiwan for too frequent intervention and the lack of transparency. This criticism has also been levied against China.
The US concern is not over what China says. In fact, it seems as if the US can embrace much of what the PBOC says about the yuan. The issue is the gap between what China says and what China does. Simply because China is a one-party state, it does not mean the government is homogeneous. There are many different stakeholders and the reform-minded PBOC is one among many, and its arguments do not always seem to carry the day."